Industry Reaction to the Queen’s Speech on The Lettings Fees Ban

Posted on June 22, 2017.

Anyone hoping the fallout of the General Election or Brexit negotiations would push the lettings fee ban into the long grass was bitterly disappointed yesterday after it was included in the Queen’s Speech.

A draft Tenants’ Fee Bill was among 27 proposed laws that MPs will be working on over the next parliamentary term, however long that may be.

In a further twist, the Bill, put forward just a couple of weeks after the fee ban consultation closed, also proposes allowing tenants to reclaim unlawful fees, which wasn’t mentioned in the initial documents for consideration.

The Government has also followed through on suggestions to tackle tenancy deposits, by saying holding deposits would be capped at no more than one week’s rent and security deposits at no more than one month’s worth.

David Cox, chief executive of ARLA Propertymark, said any provision for redress was unlikely to be retrospective as fees are currently lawful as long as they are property displayed.

e suggested legislation could be written over the summer and introduced after the party conference season. It could then take up to six months to get through Parliament.

He told EYE: “The ban could be introduced by October next year or maybe April if MPs are really quick.

“It depends how slow Parliament is and how high it goes up the agenda.”

But Ajay Jagota, managing director of sales and lettings firm KIS, suggested it could come as soon as this autumn as it may be one of the few proposals with cross-party support that a minority Government can get passed.

Cox also expressed doubts that the Government would have even looked at many of the consultation responses since it closed at the start of June.

He said: “It appears they had already made their decision and therefore the consultation was no more than a ‘tick box’ exercise and they haven’t appropriately taken the industry’s views into account.

“A ban on letting agent fees will cost the sector jobs, make buy-to-let investment even less attractive, and ultimately result in the costs being passed on to tenants.”

Criticism also came from the National Landlords Association, with chief executive Richard Lambert labelling the deposit cap as a “political gesture from a Government desperate to court the voters who supported their opponents at the last general election”.

He said: “Some landlords use a higher deposit to give them the extra confidence they need when letting to higher risk tenants, so this could also have the unintended consequence of deterring them from offering their property to those likely to be struggling with affordability in the first place.”

Other landlord groups and lettings agents were equally scathing.

Alan Ward, chairman of the Residential Landlords Association, said the Bill left tenants and landlords in “unhelpful limbo”.

He said: “Rather than proceeding with draft plans that will be eclipsed by battles over Brexit, ministers could instead use powers they already have to introduce a fixed menu of fees which letting agents would have to publish.

“This would enable tenants to immediately understand fee structures, and enable them to more easily shop around.”

Aaron Cambden, director of Fairview Estates, said lettings agents were being unfairly targeted.

He said: “I don’t understand how a government can come in and tell people how to run their businesses, and how much to charge their customers.

“Competition between businesses keeps prices competitive and just like any industry some companies will charge way more than others, but then it’s up to the customer to choose who to go with. That’s why there is an open market.

“The Government would never tell top solicitors to lower their prices and ban them charging thousands to deal with a property sale; the Government is also quite happy to charge home owners stamp duty in the thousands when purchasing a home and I don’t see how this is different.”

“From our point of view it’s business as usual. For quite a while now we haven’t charged the standard administration fee, because we simply don’t see the need.

“We also don’t charge the landlord their portion as they are paying us a fee already so we’ve always felt it was unjustified to ask for anything else on top.

“There has been talk of some agents pushing the fees on to the landlord, who could subsequently increase the rent to cover the additional costs.

“However, I feel this is unlikely, as with the sales market, overly high prices in the rental market stand out and the properties will simply not let, so all-in-all this will be a very positive move for tenants.”

Other proposals in the Speech that could affect agency include a consultation on leasehold reform and the usual commitments to build more homes.

There was yet another pledge to “look at ways we can streamline the home buying process so it is cheaper, faster and less stressful for people when they make the biggest purchase of their life”.

Similar promises were made on the home buying process by former Chancellor George Osborne early last year but never materialised.